Flood Insurance 101: What Homeowners Need to Know

Prepare for floods, items in water

Your home is very likely to be the most expensive — and meaningful — purchase that you ever make. Yes, at its most basic it’s where you’ll sleep and spend your weekend hours away from work. But it’s also where you’ll raise your family, where you might conceive and start a business, and where you’ll make memories to last a lifetime. If you’re like most Americans, your home will even form a central piece of the legacy that you leave your children and grandchildren.

It’s pretty clear, then, that something so precious needs to be protected.

If you’re an aspiring homeowner, you likely already know that you need homeowners insurance, which will protect your home from certain types of damage. But it’s important to understand that most standard homeowners insurance policies do not protect your home against all possible damage. That is where insurance riders, or add-on policies, come into play.

One of the most common — and important — rider policies for homeowners to be aware of is flood insurance. Below, we take a look at what flood insurance is, how it works, what it covers, and answer all of the most common questions that homeowners tend to have about this type of coverage.  

What Is Flood Insurance?

Flood insurance is a specific type of insurance policy designed to cover your home and belongings against losses incurred due to water damage related to flooding. Flood insurance is typically purchased separately from, or in addition to, your homeowners insurance policy. 

How Does Flood Insurance Work?

Flood insurance works basically the same as other types of insurance.

Your first step to getting flood insurance is to purchase a policy. This policy will outline everything that you need to know about your plan: What’s covered, what your monthly premiums will look like, what your deductible will be, etc. Once you have purchased a policy, it will typically take approximately 30 days to go into effect. 

After you’ve purchased your policy, you’ll need to make monthly premium payments to maintain coverage. If, while your home is covered, your home or property is damaged by water during a flood, you will be able to file a claim with the insurance company. It’s important to note that before the insurance company will pay out, you’ll need to meet your deductible. 

How to Buy Flood Insurance

The Federal Emergency Management Agency (FEMA) provides flood insurance through the National Flood Insurance Program (NFIP), which partners with more than 60 private insurance companies to sell flood insurance policies. 

Most homeowners choose to purchase NFIP flood insurance as a rider through their existing homeowners insurance provider, though it is possible to purchase coverage on its own from a different company if you choose to do so. Here at Matic, we make it easy to find the perfect flood insurance policy for your needs. Just answer a few questions and we’ll pair you with an insurer serving your area in as little as 60 seconds, without the need to comparison shop on your own.

NFIP plans will only provide coverage of up to $250,000 for building property damage and up to $100,000 for damage to personal belongings. If you would like additional coverage, you may be able to buy it from your private insurer. 

What Does Flood Insurance Cover?

The NFIP gives homeowners the option of purchasing building property coverage, personal contents coverage, or both. Each of these types of policies cover different things. 

Building Property Coverage

Building property coverage is meant to protect the actual physical structure of your home. This includes the shell of the home, its foundation, plumbing, electrical systems, HVAC systems, cabinetry, flooring, etc. A detached garage will also typically be covered. The maximum amount payable through an NFIP policy for building property coverage is $250,000, though additional coverage can be purchased through your insurer.

Personal Contents Coverage

Personal contents coverage is meant to protect the individual items inside your home. This will typically include certain appliances, furniture, electronics, clothing, freezers and lost food, and various valuables (though limits exist). The maximum amount payable through an NFIP policy for personal contents coverage is $100,000, though additional coverage can be purchased through your insurer.

What Does Flood Insurance Not Cover?

First, it’s important to note that flood insurance will only cover water damage that is caused by a flood. Water damage caused by other events, such as a burst pipe or a sewer backup, is not included in flood insurance policies. You can purchase individual policies to cover yourself against these risks. 

It is also important to note that flood insurance does not cover damage to all of your property. Some examples of items not covered include:

  • Motor vehicles 
  • Outdoor property (fencing, decks, patios, pools, etc.)
  • Landscaping 
  • Detached structures on your property 
  • Cash or jewelry beyond specific limits
  • Stock certificates 

Additionally, mold, mildew, or other water damage that could have been avoided will typically not be covered. If water damage from a flood leads to mold or termites, that damage will also not typically be covered. 

Depending on the specifics of your policy, items stored in a below-ground room (like a basement or crawl space) may not be covered.

Does Car Insurance Cover Damage From Flooding?

Whether or not your car or other vehicle is covered for flood damage will depend on the specifics of your auto insurance policy. If you carry comprehensive coverage, then your car should be covered, but it’s important to carefully read your policy to understand exactly what events and types of damage are covered. You will likely need to pay a deductible for each flooding event.

Is Flood Insurance Required?

The answer is that it depends. If your home is situated in an area which is prone to flooding, then your mortgage lender will likely require you to carry a certain level of flood insurance as a condition of your loan.

But even if you are not required to purchase flood insurance by your lender, doing so can be incredibly wise. According to FEMA, just one inch of flood water can lead to more than $25,000 in damage. FEMA also notes that more than 40 percent of all of the claims the agency receives are for homes in low- or moderate-risk regions. With this in mind, all homeowners should consider purchasing flood insurance for their homes.

What Does Flood Insurance Cost?

The cost of your flood insurance policy will depend on a number of different factors. The most impactful of these factors is where your home is located; i.e., how great is the risk that it will experience flooding?

Other factors that will influence the price of your policy include whether you are purchasing building coverage, personal contents coverage, or both; how much coverage you purchase; the deductible you choose; the age and design of your home; and more. 

That being said, the average annual price for an NFIP flood insurance policy is approximately $700 per year. 

Is Flood Insurance Right for You?

Because homeowners insurance policies do not typically include flood coverage, in order to have true peace of mind that you are covered from a worst-case scenario, you should at least consider purchasing flood insurance. While it will be an additional expense, the knowledge that you are truly protected is well worth it for most homeowners. 

If you are considering flood insurance for your home but aren’t sure the easiest way of opening a policy, or have questions about how much coverage you need, the good news is that there are many resources to help you find your answers.

Here at Matic, our goal is to make it as easy as possible for homeowners to purchase the exact right insurance policy, whether that is homeowners insurance, auto insurance, flood insurance, or any other type of policy. All it takes is answering a few simple questions and you can have a personalized quote for an affordable policy.

This Blog/Vlog/Website is made available by Matic Insurance Services, Inc. for educational and informational purposes only. Matic makes no representation or warranty of any kind, express or implied, concerning the accuracy, completeness, or suitability of the information contained herein. Insurance products and services described may not be offered in all states. Eligibility for insurance will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time. A Matic Insurance Agent can offer you practical guidance and answer questions you may have before you buy.